• Declaration of foreign income and expenses

Declaration of foreign income and expenses

27 May 2016

Individual taxpayers may experience problems when trying to declare foreign income and expenses on their Danish tax return.

In the April 2016 issue of tax:watch, we described the issue of dividing deductible expenses between foreign and domestic source income. Individual taxpayers resident in Denmark working in both Denmark and another country may currently face a similar problem when preparing their Danish tax returns.

Such individuals may be covered by the social security system of a foreign country and are required to pay contributions to foreign social security. For employees, the contributions are generally withheld from the salary by the employer.

Depending on the circumstances, the individual may be entitled to a deduction on the Danish tax return for mandatory employee contributions to foreign social security. The deduction is important, as the contributions to social security are often of a significant size.

The deductible expenses must be attributed to work performed in Denmark and work performed abroad respectively. However, the Danish tax return is not designed to allow the taxpayer to declare the expenses for mandatory foreign social security contributions correctly in many cases. If you experience such problems, BDO can assist you preparing and filing you Danish tax return.

The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge.